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Medupi power station drives up local property prices

The property market of Lephalale, once a sleepy coal-mining town in Limpopo, is booming because of state-owned power utility Eskom’s construction of Medupi, the R105 billion power station expected to be the fourth-largest in the world.

Lephalale, just east of the Waterberg, is named after the main river that flows through the town. It was established in 1960 as Ellisras after the original farm owners, Patrick Ellis and Piet Erasmus.

Lephalale is home to the remains of early human ancestors, it is also where the Bushmen settled 2 000 years ago. The first white settlers arrived in the Waterberg in 1808 and in the mid 19th century a group of Dutch travellers set out from Cape Town searching for Jerusalem. Interestingly, when they arrived in the Waterberg, they miscalculated the distance they had travelled and thought they had reached Egypt.

The Waterberg holds 40 percent of South Africa’s coal reserves for power generation.

Before the Medupi project was launched, Lephalale’s economy was driven by Eskom’s Matimba power station and Exxaro’s flagship Grootegeluk mine, which will provide coal to Medupi.

Since the commissioning of the coal-fired Medupi power station, Lephalale has grown rapidly. The influx of contractors, consultants and job seekers in search of a better life has driven the demand for accommodation and property prices have sky-rocketed.

Wayne Derksen, the chairman of the Lephalale Chamber of Commerce, said there had been a massive improvement in employment, but only as a result of certain spin-offs.

‘A lot of the economic opportunities are not being made available to local business and, if they are, big business makes it impossible to get this business due to tender processes and red tape,’ Derksen said.

Developers have exploited the demand for retail centres, and shopping centres and vehicle outlets have been built.

One of the new developments is the R170 million Lephalale Mall built by the Moolman Group and Uniqon and opened in November last year.

The 15 800m2 shopping mall employs 400 people and its major tenants are Checkers and Game. The mall also has Edgars and McDonald’s outlets, which are signs of prosperity.

Steph Beyers, a director for development at the Moolman Group, said the construction of the mall was a boost for local business that had been subcontracted to supply building material and sand.

Even after the mall was complete, the benefits for local businesses had continued as they had been contracted to provide cleaning, security and maintenance services, Beyers said.

‘Our market research indicated that there was an undersupply of retail facilities in the town of Lephalale without even taking into account the additional people and spending power directly related to the Medupi power station construction,’ Beyers said.

Assis Pontes, a principal agent at Pam Golding Properties, said rentals were the main source of growth for Lephalale’s property market.

A two-bedroom unit with one bathroom cost R10 5000 a month to rent and R910 000 to buy, Pontes said.

Even in Marapong, the township that houses mainly employees at Medupi and the Grootegeluk mine, the price for accommodation is steep.

A back room could set you back by up to R1 200 a month, while a shack cost R600 to rent, said Lephalale municipality executive director for strategy Khoroshi Motebele.

The Lephalale municipality had been inundated with requests from residents to transform their homes into guest houses, Motebele said.

‘Property has gone crazy and there are numerous expansions in Lephalale,’ he said.

The town’s rapid growth had added strain to the municipality’s water and sanitation services, Motebele noted.

In response to the influx of migrant workers, the government has set aside R800m towards improving bulk infrastructure in the area.

About 5 000 housing units were to be built in the Joe Slovo settlement, Motebele said.

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